Fill 'er up: the rush for oil and gas stocks

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The combination of a profit upgrade from industry leader Woodside and a jump in the oil price to record levels in response to renewed terrorism fears prompted a stampede into local oil and gas stocks yesterday.

Woodside rose 71c to a record $18.70 after it said its June-half profit, due to be announced on August 18, would be 10 per cent higher than the $314 million (before significant items) average of analysts' forecasts.

Woodside said some analysts had not accounted for unrealised foreign exchange gains flowing from the sale of a 40 per cent stake in the Enfield oilfield at the end of March when the Australian dollar was worth US75.49c.

The exchange rate to be applied on the proceeds at the June 30 balance date was substantially lower at US69.10c, with the gain in Australian dollars bumping up net profit before significant items.

The previously forecast gain from the sale of $375 million remains the same and will be booked as a significant item.

Although the profit boost was not linked to the oil price surge, it added to the rush into the sector.

The price of crude oil rose in New York on Friday after the US Government said al-Qaeda might bomb financial institutions, increasing concern that terrorists would attack other economic targets such as oil pipelines and refineries.

Crude oil for September delivery on the New York Mercantile Exchange rose $US1.05 to $US43.80 a barrel.

"People are pricing in plenty of risk at the moment," said Daniel Hynes, an ANZ analyst. "The geopolitical risk issue has been an underlying theme for close to a year now and I don't think it's going to go away any time soon."

Concern about terrorist attacks had added as much as $US8 to the price of oil before the latest US threat, he said.

Commonwealth Bank commodity strategist David Thurtell said the supply uncertainties came at a time of strong demand for oil due to strong economic growth in the US and China.

He told clients that the Chinese Ministry of Commerce expected the country's crude oil demand to rise by 12 per cent this year as household income and consumer spending increased.

"Rising global demand has reduced spare capacity among producing nations," he said. "There is probably only 1.5 million barrels of oil a day in spare capacity at present.

"A terrorist hit on a major piece of oil infrastructure in the Middle East could wipe out this spare capacity altogether."